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On the 28th of December 2014, it was officially announced by Billy Anderson (via a level on LittleBigPlanet 2) that the sequel to Traffic Panic! was in development. This would later be revealed to be Traffic Panic 2: Road Rage![1].

On the 10th of August 2015, it was revealed that a closed alpha will take place, starting with a small group of members which slowly expanded as development progressed[2][3].

On the 18th of October 2015, a trailer was released for Traffic Panic 2: Road Rage! at Tri-Expo 2015 announcing the release date to be November 4th 2015. Within the trailer it was also announced that if users subscribed to The Network, they would be sent beta key for the Traffic Panic 2: Road Rage! beta.

On the 20th of October 2015 the beta for Traffic Panic 2: Road Rage! was released and a beta key was released to users of Sackinima.com without the need to sign up to The Network. On the 27th of October 2015 the beta was made open to users of Twitter with some adjustments. The next day, the official LittleBigPlanet twitter account and LittleBigPlanet Community Manager Steven Isbell's twitter account re-tweeted the announcement.

On the 4th of November the level was released at 16:32 UTC, 32 minutes later than announced. A tweet was posted at 16:33 announcing the release of the level, which was then subsequently re-tweeted by the LittleBigPlanet's official Twitter profile and the profile of LittleBigPlanet community manager, Steven Isbell.

On the 6th of November the level was added to the official Team Picks category in LittleBigPlanet 3.

Development on Traffic Panic 2: Road Rage! started in late November 2014. Originally, Billy Anderson intended to use the original level (Traffic Panic!) as a template for the sequel and then build upon it. However, as LittleBigPlanet 3 for PlayStation 4 was suffering with Downloadable Content compatibility issues at the time, Anderson was unable to use the original level and therefore started to create the sequel from scratch.

The logic structure of Traffic Panic 2: Road Rage! is extremely different to that of its prequel, Traffic Panic!. In an attempt to prevent lag, the 3 additional Maps for Traffic Panic 2: Road Rage! are emitted only when they are needed. The spawn logic for vehicles are contained within microchips which are equipped with followers in order to move the spawn logic to the currently active map. The level then uses broadcast microchips in order to programme the vehicles. In the original level, Traffic Panic!, there was only one Map and Broadcast Chips were not included in LittleBigPlanet 2, therefore all logic is static and permanent.

During early development, Traffic Panic 2: Road Rage! used a system of Score Sensors, Score Givers, Collectabells and the Memoriser tool in order to create an unlock system whereby players' scores were converted into Collectabells. Using these Collectabells, players would then have been able to unlock Maps and Character Packs. Due to thermometer issues with this method, this system was replaced by a score-unlock system that uses Score Sensors and Object Savers in order to unlock the additional content. The Object Saver system was then eventually replaced in v1.05 with Memorizers.

On August 10th of 2015 the level entered its Alpha stage, and on the 20th of October the level entered its Beta stage. On November 3rd, the day before the level was due to be released, the level's state became a release candidate. The next day, on November 4th the level was updated in this state adding more features before being tested and published.

On the 5th of November 2015 a sub-level titled Traffic Panic 2: Slim Edition! was published. Traffic Panic 2: Road Rage! was updated in order to automatically send PlayStation 3 users to the new level. The slim version cut down on many aspects such as logic and assets in order to provide a smoother gameplay experience for PlayStation 3 users. As of update v1.11 to Traffic Panic 2: Road Rage!, the slim version became outdated and was eventually deleted on February 8, 2017.

After the launch of the level in November 2015 the level was not given much support by its creator, Billy Anderson. Anderson claims he was aware of the issues of the level at the time, but was not motivated to fix them due to the rush to get it published in an operatable state by November 4, 2015 - the first anniversary of Traffic Panic!.

The level was initially given four updates, the last one being published two days after the levels' release. The next set of updates were not until over a year later on November 10, 2016 when v1.05 and v1.06 were released, again fixing some minor issues. Even after these updates, several major issues remained. During February of 2017 Anderson sought to address all of the issues within Traffic Panic 2: Road Rage! as well as add extra features. This period was dubbed 'The February Crunch' by Anderson, and within one week, from February 2nd to February 11th 2017, fifteen updates took place to the level. At this time the level was featured in the 'Greatest Hits' playlist and recieved a significant boost in plays.

Traffic Panic 2: Slim Edition! was a sub-level version of Traffic Panic 2: Road Rage! that was exclusively and automatically accessible to PlayStation 3 users via accessing the main game. Traffic Panic 2: Slim Edition! removed many decorations, stickers and logic tools in order to provide a smoother gameplay experience for PlayStation 3 users, after several complaints that the main game did not operate smoothly, if at all, on the PlayStation 3.

After several updates in early 2017, the standard Traffic Panic 2: Road Rage! level became much more efficient as Traffic Panic 2: Slim Edition! became more outdated. As a result, on February 7th 2017, the automatic re-direct to Traffic Panic 2: Slim Edition was disabled in update v1.11. The next day, on February 8th 2017, Traffic Panic: Slim Edition! was deleted from BillyAnderson9's Earth.

On the 29th of May 2015, Billy Anderson published a level showcasing and demonstrating the new Day/Night cycle of Traffic Panic 2: Road Rage!. However, Billy Anderson unintentionally left some logic from the full-game intended for promotional images in the demo, and users were able to exploit the level and access confidential information regarding new features.

Screenshots of the unannounced features were then shared via the social networking site Twitter[4]. The screenshots revealed three map names: 'Wild West', 'Cross-Roads' and '2015', as well as a menu option titled 'Characters' and some notes revealing six character 'packs': Comics, Animals, LBP2, LBP3, Loco-Roco and The Incredibles. This indicates that there were originally more than 4 additional Character Packs planned.

Originally the level was intended to use the original level of Traffic Panic! as a template and was intended to be an upgrade to the original than an independent sequel.

The first model of car to be created was the orange controllable containing Daxter. The original model was featured in the Day/Night Cycle Demo.

The Marlon Random car features a Marlon Brandon Emosound effect if involved in a crash.

The map 'Back To The Past' in Traffic Panic 2: Road Rage! is the map from the original installment of the series, Traffic Panic!, re-mastered. The re-master contains an intro cut-scene with the Delorean time machine from the Back To The Future franchise, the new characters from Traffic Panic 2: Road Rage!, the new day/night cycle settings and uses the street light ambiance that was a part of the map in the original game but not used. The song 'Mr. Sandman' also over-rides the music settings as to pay further homage to the Back To The Future trilogy, as 'Mr. Sandman' plays in the background as Marty McFly first lands in 1955. As the logic structure of Traffic Panic 2: Road Rage is so different from the first installment, all of the original logic was removed from the map besides the original controllinator logic for the traffic lights (which was tweaked). As a result, unlike in the original game, the TARDIS Easter egg does not de-materialize.

On April 1st of 2016, a modified version of 'Traffic Panic 2: Road Rage!' titled 'Traffic Panic 3: & Knuckles!' was published on the earth of BillyAnderson9 as an April Fool's joke. The level's theme was changed so that it was garish with intended typos, every car was replaced to a red one containing the Sonic character Knuckles and the speed of the cars was changed from 7 to 11. The level also featured the music from Traffic Panic 2: Road Rage with an increased tempo and an off-key. The unlockable maps and character packs were also removed.